The Bonneville Power Administration on July 23 issued a record of decision (ROD) approving a 4.4 percent transmission rate increase and a 7.1 percent power rate increase.
The BPA‘s BP-16 rate proceeding established power and transmission rate schedules and general rate schedule provisions for the BPA that replace existing rates and will be in effect from Oct. 1, 2015, through Sept. 30, 2017.
In the ROD, BPA Administrator Elliot Mainzer said that the final rates balance the economic effects of increased rates against the need for continued investments in the region’s power and transmission assets, while also ensuring a high probability of recovering all of BPA’s costs.
“I understand that a rate increase of this magnitude creates additional hardship in communities that have yet to recover from difficult times, in particular those in the more rural parts of the region,” Mainzer said. “I have considered this impact in my final decisions and believe we have made cost reductions and taken other management actions to keep the rate increase at the lowest prudent level.”
Mainzer noted that rate increases are due to increased hydroelectric system operations and maintenance costs and fish and wildlife expenses; the expiration of debt management actions that reduced capital costs; the automatic cost escalation from the 2012 Residential Exchange Program; and higher transmission costs that are included in power rates. He also said that the transmission rate increase stems mainly from capital investments in the aging transmission system.
According to Mainzer, the ROD supports continued regional conversations on issues that would benefit from collaborative discussions with stakeholders, including, for instance, the development of disciplined financial policies that will equitably apply to both power and transmission rates, including the use of financial reserves and risk mitigation measures.
Mainzer also encouraged collaboration to address stakeholder concern that policies in California may have devalued long-term firm transmission capacity on the Southern Intertie.
“I believe that seams issues exist and must be addressed,” Mainzer said. “Before adopting a ratemaking solution, however, such as significantly increasing the Southern Intertie hourly non-firm rate, BPA will seek clarity on the extent of the issue, conduct a broader examination of seams issues with the involved parties, and evaluate both ratemaking and non-ratemaking solutions.”
He added that, if the examination shows that a ratemaking solution is necessary to protect BPA’s ability to sell long-term transmission capacity, BPA may conduct an expedited rate proceeding.
According to the ROD, BPA this fall will schedule a set of workshops for regional leaders to establish a common understanding on issues such as capital investment in the hydroelectric power and transmission systems, internal operating costs, and product delivery models, including energy efficiency.
As part of the ROD, Mainzer decided not to eliminate the Montana Intertie rate, which is available to transmission customers taking Eastern Intertie point-to-point transmission service. The Eastern Intertie is part of the Montana Intertie, a BPA-owned 500-kV line that runs from Broadview substation on NorthWestern Energy‘s transmission system west to Townsend, Mont., and west from Townsend on BPA’s system to Garrison, Mont.
As proposed in the rate case by Renewable Northwest, elimination of the Montana Intertie rate would allocate BPA’s share of the Eastern Intertie costs in network rates. During the rate case, Renewable Northwest claimed that BPA should eliminate the Montana Intertie rate for open access service on the Eastern Intertie and charge network rates starting at Townsend in order to encourage use of BPA’s 200 MW share of the Eastern Intertie and the development of wind resources in Montana, according to the ROD.
Renewable Northwest’s mission, according to the organization’s website, is to promote the expansion of environmentally responsible renewable energy resources in Oregon, Washington, Idaho and Montana.
Mainzer determined in the ROD that elimination of the Montana Intertie rate likely would not result in additional Montana wind generation, but that BPA will work with interested parties after the rate case to discuss transmission issues relating to potential wind energy development in eastern Montana, including necessary upgrades and costs.
Cameron Yourkowski, senior policy manager for Renewable Northwest, in a July 23 statement said the organization is “deeply disappointed” in the BPA’s decision.
“BPA had an opportunity to increase utilization of currently unused transmission capacity, generate new transmission revenue, and reduce barriers to development of new renewable power generation to meet growing demand for clean energy, but chose not to,” Yourkowski said. “We believe this decision is incorrect and encourage BPA to reconsider charging a single rate for transmission along the Eastern Intertie that will open the door to new renewable energy and a cleaner future.”